Life Insurance Corporation of India vs DES RAJ SINGLA

LIFE Insurance Corporation and another are the appellants challenging order of District Forum, Patiala dated October 9, 1996 whereby direction was given to the appellants to pay interest on the amount of Rs. 15,000/- for the period April 1, 1996 to October 31, 1996 alongwith costs of Rs. 300/- to the complainants, Des Raj Singla and his wife Kanta Singla.

THE two complainants Des Raj and his wife had purchased 1,500 Units of the value of Rs. 10/- each of LIC Mutual Fund Scheme floated by the Life Insurance Corporation. THEy were getting dividend, thereon from time to time upto April 1, 1996. THE amount of the units was refunded to the complainants on January 20, 1997 on maturity. But no interest for the period April 1, 1996 to October 31, 1996 was paid by way of dividend. Hence they approached the District Forum with the complaint. THE opposite parties submitted their version, broadly admitting the fact of purchase of units and payment of dividend. THEy denied their liability to pay the interest for the disputed period on the ground that as per scheme at the time of winding up thereof the value of the units as prevalent in the market was determined and payments made. Hence no further dividend for the disputed period, which was less than an year, was liable to be paid. THE plea of the opposite parties did not find favour that the impugned order was passed. After hearing Counsel for the parties, we are of the view that the order of the District Forum cannot be sustained in law. Annexure-A filed with the appeal contained the terms and conditions of the scheme ''Dhanashree 1989''. The minimum dividend of 12% was payable every year and the higher dividend could be declared depending upon performance. The relevant clause for duration and liquidation of the scheme provides as under : "The scheme will operate for six to seven years. On the expiry of the period, the assets and liabilities will be evaluated and disposed of, at market rates. The proceeds, after deduction of winding up charges, will be distributed to the investors in proportion to their holdings."

It would be clear that after expiry of the relevant period of the scheme, the assets and liabilities were to be evaluated and disposed of at market rates and net profits after deducting of winding up charges were to be distributed to the investors in proportion to their holdings. In case the contention of learned Counsel for the complainant had to be accepted, that for the concluding year of the scheme, the dividend was required to be declared at the end of the financial year and if that dividend was to be payable to the investors, their market value would correspondingly decrease. When in the present case, the market value at the time of winding up of the scheme was determined and paid, no question of further payment of dividend to the investors as no funds under the scheme would be available. If dividend was to be paid first and then the scheme was to be liquidated, the investors would not have got the amount already paid as discussed above. Thus the investors, the complainants were not entitled to any dividend for portion of the financial year when the scheme was wound up. For the reasons recorded above, this appeal is allowed, the order of the District Forum is set-aside and the complaint is dismissed. There will be no order as to costs. Appeal allowed.